Eurozone growth at 20-month low as Germany slows

LONDON – Economic growth across the 19-country eurozone has fallen to a 20-month low as the German economy, in particular, loses momentum, a closely watched survey showed Friday.

Financial information company IHS Markit said its purchasing managers' index — a broad gauge of economic activity — across the single currency bloc fell in September to 52.6 points from 52.9 the previous month. Anything above 50 indicates expansion.

Though the firm did not single out any one factor for the slowdown, such as unease over Britain's vote to leave the European Union, a more detailed look shows the services sector has had a particularly disappointing month while manufacturing expanded at its fastest pace since December.

There was a similar discrepancy among the region's top two economies — while growth in German business activity eased to a 16-month due to a slowdown in services, France's output rose at its fastest pace since June 2015. In fact, France outperformed Germany for the first time in more than four years.

And the overall rate of expansion outside of the 'big-two' moderated to a 21-month low.

The authors of the report said the underlying picture in the eurozone is one of "sluggish" growth of around 0.3 percent over the quarter as a whole.

"It also remains clear that the economic upturn is still fragile and failing to achieve any real traction," said Rob Dobson, senior economist at IHS Markit.

The survey is likely to ratchet up expectations that the European Central Bank will enact further stimulus measures in the months to come in an attempt to shore up growth and get annual inflation back toward the target of just below 2 percent. In the year to August, inflation stood at just 0.2 percent.

"We expect it to announce an extension of its asset purchase programme in December, if not before," said Stephen Brown, European Economist at Capital Economics. That program involves buying bonds in order to lower market interest rates and make borrowing cheaper. It is currently due to end in March.